October 28, 2011

Is the end of Barnes & Noble nigh?

by

We’ve written before — and before that — that Barnes & Noble seems to us to be enacting some kind of end-game, at least as far as books are concerned. Our thinking has been that the company is making moves that are geared toward becoming some other kind of retailer, where books play a minimal role, and there are no brick and mortar stores at all.

But in a commentary for the Motley Fool, Rick Aristotle Munarriz  predicts something worse: bankruptcy.

Mynarriz starts with an observation we’ve made here before: “Watching its rival Borders liquidate this summer should have been its opportunity to grab market share, just as the cavernous book-selling superstore has benefited when smaller bookstores have had to board up and move on.” But as he observes, they didn’t go after that market share.

And now, says Munarriz, it’s too late. Soon, he says, “the demand for gargantuan dedicated bookstores will dry up.” Meanwhile, the successful launch of the Nook  tablet “only had a quarter of the market before the Kindle dropped its price into the single digits and the Kindle Fire raised the bar on what a sub-$200 tablet can do. ” Now, he says, “Barnes & Noble is in a lose-lose situation. If it slashes its prices to remain competitive, margins will get even worse. If it doesn’t respond, it’s back to relying on its fading superstores for a slower death.”

Nor is Munarriz the only one thinking this. Another article, from the LAist, takes a local angle, asking in its headline, “Is Your Local Barnes and Noble Going to Close Down?

Even a report in Time magazine, while taking a more cautious approach, hovers around the obvious — and makes the following well-we-don’t-think-it’s-so-ironic observation:

… there’s some pretty rich irony in all this for those who have been watching B&N take over the book industry in the past two decades. When B&N and Borders began gaining popularity in the 1990s, their efficiencies of scale seemed likely to drive the small, local bookseller right out of business. And indeed countless such shops are now gone.

But it turned out the economics didn’t quite work for the big guys either. Borders is now gone, and B&N stores are struggling, but the independent bookstores that survived have for the most part stablized … Scale, it turns out, wasn’t the crucial factor; knowing exactly what your customers like to read, and what they don’t, is.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him at @mobylives

MobyLives